Folding Reedy Creek May Be 'Contractual Impossibility'

Attorney Jacob Schumer takes a look at some reasons why dissolving Disney's Reedy Creek Improvement District is easier said than done. 

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In a piece for Bloombergtax.com, Schumer examines particulars of Reedy Creek's bond debt and how it could prohibit Florida lawmakers from forcing the district's termination. 

Similar to other large municipalities, Reedy Creek Improvement District is its ability to issue bonds to cover the cost of major infrastructure projects. Those bonds are purchased by investors and paid off over an extended period of time. The story cites language from RCID bond offerings--approved by Florida legislature--stating that the district and its functions will not be materially altered until such time as the bonds are satisfied. RCID's outstanding bonds cover a variety of projects with different redemption terms and end dates. Many are eligible to be redeemed early, but Schumer notes at least one bond which cannot be satisfied until October 2029, seemingly halting any plans to dissolve the district until at least that date.

Schumer also questions the challenges involved in dividing more than $1 billion worth of district debt between Orange and Osceola counties:

"Reedy Creek spans both Orange and Osceola counties, so how will the debt be divided? Would it be by taxable value of property or by the properties themselves? And how would that apply to the utility revenue bonds when there is no easy way to divide which county the utilities rest in?"

Schumer ultimately concludes "there’s a much more basic reason Florida can’t dissolve Reedy Creek—it promised bond purchasers that it wouldn’t." The full article is available at Bloombergtax.com.  

DVCNews previously examined how Disney Vacation Club members would potentially be impacted by the loss of Reedy Creek Improvement District. The tax aspect is dissected in greater detail--along with comparisons between Walt Disney World and Universal Studios Orlando--in this thread on DVCinfo.com

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